Romania: Disallowed VAT deduction, supplies provided by inactive taxpayer

VAT deductions disallowed under Romanian law

The Advocate General of the Court of Justice of the European Union (CJEU) issued an opinion concluding that Romanian law provisions that deny a value added tax (VAT) deduction with respect to services provided by an “inactive taxpayer” (one that has been removed from the register of taxable persons) conflict with the rules under an EU directive.

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The case identifying number is: C-101/2016

The Romanian tax authorities denied a VAT deduction related to the purchase of services from a company that was determined to be an inactive taxpayer. After an appeal to a court in Romania, the taxpayer requested an opinion from the CJEU as to whether the Romanian rules were compatible with EU directive measures.

The Advocate General issued an opinion, proposing that the CJEU reject the limit imposed under Romanian law for supplies purchased from inactive taxpayers.

The Advocate General’s opinion is not binding on the court. The judges now will begin their deliberations in this case with judgment to be given at a later date.

 

Read a June 2017 report [PDF 320 KB] prepared by the KPMG member firm in Romania

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